Hot topic of the week…legislate “financial adviser”

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In their second submission to the FoFA amendments, the Financial Planning Association (FPA) suggested putting the word “financial adviser/planner” into legislation in order to gain more consumer confidence and stamp out misuse of the name that could lead to sullied reputations.

There were a variety of mixed opinions about the proposal, with some of you wholeheartedly agreeing, and others thinking it might not be the right way to solve the problem.

While Funky Goose completely supported the recommendation, Viewsxew was more guarded: “Are we really looking for even more government regulation of the industry (which would almost certainly condemn itself to lifetime status as such) - or are we wanting to move assertively towards recognition as a profession? Many years ago, the accounting profession abandoned the attempts to reserve the name 'accountant' to people with specific education, skills and training - realising that to do so would expose them to less control of their own destiny; and subject their members to higher levels of regulation.”

James Howarth said ASIC legislation is the problem because it allows for conflicts of interest within the industry: “Doctors should not work direct for the pharmaceutical companies. That would create moral hazard and that is why doctors and drug makers are on separate sides of the health profession,” he said. “In financial services, the doctors still work for the pharmaceutical companies. Product licensing and advice licencing needs to be separated and regulated by different bodies.  ASIC should regulate product, advice should be liberated from ASIC.

The idea is a great one because even as an adviser it’s difficult to determine who is licensed and who isn’t when viewing advertising, said Phil, but he didn’t agree with the second part of the FPA’s proposal, which would see only those part of an member association able to be considered an “adviser”.

Matt didn’t think the proposal would change much: “Legislating the name ‘financial adviser’ to stamp out product pushers is like passing a bill to enforce politicians to do the right thing by the public and not their own careers. Great in theory but is it really going to stop dodgy people from rorting the system.”

See the story and more comments here.

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